With modern life and increasing levels of education, more consumers are demanding information about how the delicious food they consume ends up on their dinner plates.
Businesses that provide food to consumers also have a lot to consider. Every farmer, food business operator and vendor is responsible for some form of food management. Organizing deliveries, arranging suppliers and calculating food costs are all part of the supply chain process.
But lately, especially with the rising cost of food in our country, the details of these processes have become a matter of curiosity for almost everyone. I don’t know, maybe, at least for our country, the question of why a tomato that costs 1 lira in the field costs 20 lira in the market is more important than food safety. One way or another, making these processes properly traceable has become important for all of us.
The food supply chain is complex as it involves every touch point of a food item from farm to fork. Depending on the type of food involved, there may be multiple stages in the process, such as farm, processing, distribution and retailer. Here are a few challenges this process faces and what you need to know about five ways to optimize the food supply chain.
Key Challenges for Food Supply Chains
The food supply chain is an elaborate production system that maintains food security and sustainability on both a local and global scale. While most people take food resources for granted, there is a delicate balance that can be disrupted by spoilage, scarcity and price spikes. Here are some of the main challenges facing food supply chains:
- Labor and Farm Shortages
The most important and first step in the food supply chain takes place at the agricultural level. Most farming operations carry serious sustainable risks due to rising costs in our country and around the world. In addition, various regulations and restrictions have made it more costly and challenging for farms and processing plants to operate. - Increasing Regulations
Speaking of regulations, more rules have been introduced to protect workers and consumers. At the same time, some of these rules are causing obstacles in the supply chain. For example, regulations requiring drivers to record their working hours have led to higher prices and delivery delays. But more importantly, the issue is complicated by country-specific factors such as the skyrocketing fuel prices in Turkey, the need for trucks and tow trucks to drive on very expensive private highways, and the increased (actually normalized) social and administrative costs of the personnel involved in the fight against informality. - Poor Communication between Stakeholders
As the food system and supply chain is fragmented, participants have their own logistics and information systems. This makes data sharing and communication difficult, which can lead to delays and food spoilage. - Inventory Management
The lack of visibility across supply chain participants has caused many problems for grocery stores and restaurants. Without a real-time view of inventory, these businesses are under- or over-ordering, leading to food spoilage, customer dissatisfaction and brand reputation damage. - Waste
Maybe you will say, “What’s the relevance?”, but we are presented with such statistics that sometimes it is impossible to believe. The open buffet approach is already a real nuisance for our country. Apart from this, it is very sad that businesses comfortably go to waste by thinking that we are collecting the money anyway, and that consumers cannot finish the plates they fill more than necessary and cause waste. Imagine that for the first time in millions of years of human history, people are experiencing health problems and even losing their lives due to satiety rather than hunger
Ways to Optimize the Food Supply Chain
Good supply chain management ensures that food products reach their intended destinations on time. It also helps to prevent and identify potential problems such as spoilage, contamination and foodborne illnesses before they affect consumers. There are several ways to optimize the food supply chain so you can deliver a positive customer experience and achieve better results overall.
- Assess and Audit Suppliers
If your company produces, processes and transports food, you need to partner with suppliers you trust. This includes appropriately assessing and auditing suppliers against aspects such as record-keeping processes, sanitation, food safety criteria, recall programs and environmental monitoring. Once you have a relationship with suppliers, the assessment process should continue. Periodic internal audits should be conducted. If the supplier hires subcontractors, they should be examined under the same scrutiny. But first of all, you need to know what is being produced, what you are buying from your suppliers, and what quality and process you are procuring these products. The first thing to do is to identify the food produced. You can do this with RFID or barcode, which technology you will use and how you will use it or ask your suppliers to use it is a matter of your project design, but first of all, what you supply, operate or logistics is that the food is identifiable. Once you achieve this, you will be able to track spoilage rates, vulnerabilities in the supply chain, and the
conditions that the food can tolerate. - Understand Your Budget
Whether you manage your supply chain in-house or work with a third-party logistics company (3PL). Your budget will be a constant concern as it affects your bottom line. While various programs and solutions can be costly, it is crucial to analyze the impact of implementing them or abandoning them altogether. For example, a well-managed supply chain will likely outperform the competition and gain more customers due to its positive reputation. At the same time, a poorly managed one could lose customers or even face fines due to food safety issues. This is where government regulations become important - Increase Transparency and Visibility
When essential supplies ran out early in the pandemic, companies started paying more attention to what was happening in the supply chain. Likewise, consumer interest in where their food comes from has also increased, making it important for companies to address transparency in the food supply chain. Fortunately, visibility can be achieved with a variety of technology solutions. Things like RFID tags combined with a warehouse management system (WMS) can provide partners and consumers with real-time data about food products. This technology can also help with cold chain compliance by recording the temperature and humidity of items as they move along the route. Active RFID tags with memory, so-called data loggers, can be used for this. - Focus on Inventory Management
Long gone are the days of handling inventory using a scrapbook or spreadsheet. These methods are very inefficient and error-prone. Automation and digitization are the foundations of an efficient and successful supply chain. There is too much at stake in food products to not make inventory management a priority. In fact, the last links of the food supply chain are quite competent in this regard. Supermarkets, large distributors and intermediary firms/institutions in metropolitan areas have developed their technological infrastructure admirably. Unfortunately, we do not see this so easily at the very beginning of the chain. For example, issues such as inventory management, traceability and product identification among farmers and small or large cattle producers are still very virgin. Of course, at this point, other disciplines such as finance and taxation also need to be improved, because it is really difficult to take the first step of product traceability at this stage, when there are farmers who sell milk informally and big business operators who supply milk and other
animal products informally. In fact, my personal opinion is that the main problem stems from the insistence on informality. The natural result of making everything you produce, buy and sell traceable with RFID or barcode technologies will be real inventory management, full traceability and no tax evasion. But up to what point? In addition to the transparency that RFID tags provide, this technology can also help with inventory management. For example, a warehouse worker can use a mobile computing device to improve the accuracy and productivity of operations, creating a more efficient and cost-effective process. We have a chance in this regard; Turkish people, regardless of their profile, are very curious about technology and very eager to use it in their lives. Aligning the workforce with technology can be easily achieved, especially if they are convinced that it will make their work and processes easier. - Improve Sourcing and Forecasting
One of the biggest problems in recent times has been relying on a single source for supply. Not only in food, but even in technological products, critical products like chips, commodities, etc. When an unforeseen event occurs and that source is not available, it creates a ripple effect throughout the supply chain, consumers feel the risk and want to shop frantically (people lining up to buy Lupo biscuits, etc.), stock balances are disrupted, false feedback goes to the manufacturer and companies’ reputations are damaged. Going forward, it makes more sense to manage this risk with a multi-sourcing strategy, even if it means paying a slightly higher price or foregoing international sourcing options. By sourcing locally, shorter lead times give you more flexibility when there are spikes in demand. Of course, to manage this, you need instant and fully traceable stock levels and inventory information. The first way to do this is to use identification technologies.
While just-in-time (JIT) inventory models can keep costs low, this approach causes problems when there is unexpected demand for products. But whatever strategy you choose, have confidence in your forecasting methods. You also have perhaps decades of data. True, we’ve seen so much in the last few years that forecasts can be turned upside down, but once you start to ensure traceability of your product, you won’t believe how much your forecasting ability improves.
Food supply chains have a history of facing various challenges such as transportation issues, spoiled products and counterfeit products. Therefore, to optimize the food supply chain, businesses need to implement effective strategies that include the use of technology solutions to provide transparency throughout the supply chain. At the heart of this, as we said, is the use of identification technologies.
Contact us to manage your food processes with active or passive RFID tags or barcode systems.
